Shipping Container Rates From China Jump to 2-Year High Amid U.S. Tariff Threat, Red Sea Disruptions
Shipping container rates from China have reached a two-year high, driven by panic over potential US tariffs and disruptions in the Red Sea, South China Morning Post reported.
Ocean freight rates from China are on the rise again, with exporters rushing to ship goods ahead of the holiday season — a move prompted by a possible US tariff increase and disruptions in the Red Sea.
Shanghai Containerized Freight Index, which tracks shipping container rates, increased by 12.6% to 3,044.77 last week. It was the first time since August that the weekly published indicator increased past the 3,000-point level.
Freight forwarders anticipate continued growth in rates as more shippers secure vessel slots for the US and Europe. “Shippers could be facing months of very elevated rates and increased delays as higher demand combines with restricted capacity,” said Judah Levine, head of research at Freightos, a global freight booking platform, in a research note. However, Levine noted that the extent and duration of these disruptions might be less severe than those experienced during the pandemic.
Chinese exporters, ranging from garment makers to toys and festive lights manufacturers, usually begin shipments of goods ordered by Western buyers for Christmas and the New Year in July. This year, panic set in after President Joe Biden announced in May that the US would impose punitive tariffs on $18 billion worth of Chinese goods, including electric vehicles, battery parts, and solar cells.
The additional tariffs have yet to come into effect.
According to Xiong Hao, assistant general manager at Shanghai Jump International Shipping, the cost of shipping a 20-foot container from Shanghai to Europe currently stands at more than US$7,000, an increase of about US$1,000 from a month ago. He also mentioned a shortage of empty containers in Shanghai due to the high demand from exporters. Additionally, disruptions in the Red Sea, caused by attacks on ships by Yemen’s Houthi rebels, have prompted exporters to expedite their shipments.
Chinese exporters have faced volatile ocean transportation costs over the past four years. After emerging from the initial coronavirus lockdown in the second quarter of 2020, China ramped up production to meet global demand, reaffirming its role as the world’s factory. In August 2021, during the peak shipping season, exporters were competing fiercely for shipping slots, sometimes paying up to ten times the usual rates.
By September 2022, shipping container prices from Shanghai to the US had dropped by nearly 90% from their peak. In 2023, Shanghai ports handled 49.16 million 20-foot equivalent units, a 3.9% year-on-year increase and a 13.5% rise from the same period in 2019. Last year, Shanghai maintained its position as the world’s busiest container port, a title it has held since 2010, surpassing Singapore.
